Insurance question from Geico

A friend that received this letter from the auto insurance company, how does this work and what happens next ?? … this is New Jersey … there was some injuries but nothing major…

It is our duty at this time to inform you that under the contract of insurance, which you have with this Company, the limit of liability per Bodily Injury is $250,000.00 per person and $500,000.00 per occurrence, for two or more persons injured in any one accident. The limit of liability for Property Damage is $100,000.00 per accident. Our preliminary investigation has revealed that the total claims may exceed one or both of your coverage limits. Please advise us immediately if you have any money to contribute for any claims that exceed your policy limits. We will make every effort to settle all claims within your coverage limit; however, the possibility exists that the claim arising out of this accident could exceed your limits of coverage. In the event that the claims or judgments made against you are in excess of your policy limits, you will be personally liable for such excess. However, we will defend any suit against you, at our expense, as provided in the policy; we will only indemnify you and pay up to the policy limits. In as much as you may have personal liability, it is your privilege, if you wish, at your own expense, to retain your own attorney to protect your interest, in excess of your policy limits. We do not mean to imply that it is necessary for you to retain your own attorney; however, you may ……….